The Ant Trade’s Consequences

The ant trade is the name for the trickle of guns that flow south to Mexico as drugs come north.  It’s called that, because traditionally, only a handful of guns cross the border in any single arms run.  Done enough times, however, and the flow of arms can be quite large.  Hence the image of ants crossing the border all with several weapons.  It seems that trickle has increased greatly in the past few years:

No other state has produced more guns seized by police in the brutal Mexican drug wars than Texas. In the Lone Star State, no other city has more guns linked to Mexican crime scenes than Houston. And in the Texas oil town, no single independent dealer stands out more for selling guns traced from south of the border than Bill Carter.

Carter, 76, has operated four Carter’s Country stores in the Houston metropolitan area over the past half-century. In the past two years, more than 115 guns from his stores have been seized by the police and military in Mexico.

As an unprecedented number of American guns flows to the murderous drug cartels across the border, the identities of U.S. dealers that sell guns seized at Mexican crime scenes remain confidential under a law passed by Congress in 2003.

A year-long investigation by The Washington Post has cracked that secrecy and uncovered the names of the top 12 U.S. dealers of guns traced to Mexico in the past two years.

Eight of the top 12 dealers are in Texas, three are in Arizona, and one is in California. In Texas, two of the four Houston area Carter’s Country stores are on the list, along with four gun retailers in the Rio Grande Valley at the southern tip of the state. There are 3,800 gun retailers in Texas, 300 in Houston alone.

“One of the reasons that Houston is the number one source, you can go to a different gun store for a month and never hit the same gun store,” said J. Dewey Webb, special agent in charge of the Houston field division of the Bureau of Alcohol, Tobacco, Firearms and Explosives. “You can buy [a 9mm handgun] down along the border, but if you come to Houston, you can probably buy it cheaper because there’s more dealers, there’s more competition.”

Drug cartels have aggressively turned to the United States because Mexico severely restricts gun ownership. Following gunrunning paths that have been in place for 50 years, firearms cross the border and end up in the hands of criminals as well as ordinary citizens seeking protection.

“This is not a new phenomenon,” Webb said.

What is different now, authorities say, is the number of high-powered rifles heading south – AR-15s, AK-47s, armor-piercing .50-caliber weapons – and the savagery of the violence.

Federal authorities say more than 60,000 U.S. guns of all types have been recovered in Mexico in the past four years, helping fuel the violence that has contributed to 30,000 deaths. Mexican President Felipe Calderon came to Washington in May and urged Congress and President Obama to stop the flow of guns south.

U.S. law enforcement has ramped up its focus on gun trafficking along the southwestern border. Arrests of individual gunrunners have surged. But investigators rarely bring regulatory actions or criminal cases against U.S. gun dealers, in part because of laws backed by the gun lobby that make it difficult to prove cases.

First, a big problem here is there’s a politically powerful vested interest that profits from arming the drug cartels. The U.S., generally, is very good about controlling the flow of our military arms, but it seems the security state is turning a blind eye to this problem. Second, as crime has continued to decrease in the U.S. despite the recession, the increase in violence in Mexico may be the actual consequence of the lapsing of the assault weapons ban.  I’ll also just note that border states have particularly lenient gun ownership laws, which no doubt helps fuel the ant trade.  I wonder when this problem will create enough political pressure to change current gun policy.


Conservatives at Red State, of course, have a genuinely insane idea related to this: invade Mexico.

The Ant Trade’s Consequences

Supply and Demand of Government Resources

By systematically underpricing the costs of government resources through tax cuts and deficit spending, Republicans have driven up demand and consumption for those government resources.  If taxes were raised to reflect the actual cost of those government services, presumably the demand for those services would decrease.  Granted, different services have different levels of price elasticity, so demand changes would not be uniform across the state sector.  None the less, I think applying a simple microeconomic model to government services like any other good or service is a useful exercise.  In fact, this entire idea underpins Bruce Bartlett’s good attack on Republican “starve-the-beast” ideology.

Supply and Demand of Government Resources

Peru’s Not The Only One Who’s Doing Alright

Slate has a nice, little piece about how wonderful Peru’s economy is weathering the downturn. Reading the piece, I kept waiting for the mention of how Peru’s neighbor to the south, Bolivia, is also an economic bright spot in the hemisphere. The article never mentions Bolivia but has this description:

In the Western Hemisphere, one small country has outperformed its larger, richer, neighbors to the north. Its export-dependent economy has weathered the global credit tsunami in good shape . . . Its public finances seem to be sound, and the authorities appear to be making the right countercyclical moves. What’s the name of this mystery country that finds itself on an economic shining path?
(emphasis added)

Actually, Peru isn’t by it lonesome self, and the description could apply equally to Bolivia. Bolivia is expected to grow at least 2% this year, and has the largest currency reserves in relation to GDP of any country in Latin America. Bolivia is also moving ahead with infrastructure investment around the country. Pretty much Bolivia is doing all the things the article praises Peru for doing.

Although I could speculate why this article sings the high praise of Peru’s economy, while ignoring the nearly equal performance of the Bolivian economy, I don’t know if it’s really worth it. I was pondering a more complex analysis of the underlying dynamic here but then I saw that Newsweek has this out today:


These people have an almost comical inability to understand international relations and complex foreign societies. It’s doubtful these people have the ability to make nuanced judgments about the policies and ideologies of Latin American governments. And compared to this headline, a certain political ignorance of small Andean countries doesn’t seem so bad.

Peru’s Not The Only One Who’s Doing Alright

Mountain Roads

It snowed the other night in the hills around Cochabamba, and the mountains now look beautiful on my walk to work. It also snowed near La Paz, and, though I’m sure the mountains look nice and get a skier like me excited, the snow has shut down the highways connecting La Paz with Cochabamba and Oruro. This exemplifies one of the biggest hurdles in the development of Bolivia: keeping the country connected.

The country is largely in the Andes, where roads twist and turn, and it generally takes a long time to get from point A to point B. And then it snows and the capital is cut off from much of the rest of the big economic centers of the country. This hurts the ability to move things around Bolivia and generally keep the economic wheel turning. And there’s no quick solution.

That’s why projects such as this highway to connect the Cochabamba department and the eastern part of the country to Brazil are really important. They will open up new possibilities of commerce and roads that stay open even when La Paz can’t be reach.

Mountain Roads

Bolivia’s Economy: Not Too Shabby

The other day I wrote about how an Economist article distorted the picture of Bolivian opposition groups to Morales. These groups are free market in ideology and support foreign capital investment, while Morales is a statist and wary of Western nations in general. Unsurprisingly, The Economist treats Morales critically while implicitly supporting the opposition groups. There’s also the usual assumption that Morales and his socialist policies are running the Bolivian economy into the ground.

But he’s not! So far Bolivia’s economy has done alright for itself. Between setting records for currency reserves (over $8 billion now), and surviving the global slowdown with a positive growth rate intact, Bolivia’s economy is not in a bad spot. Perhaps the biggest criticism of Morales is his inability to get ATPDEA trade preferences reinstated. But that’s more a function of a strange political calculation in Washington and Morales has responded with export subsidies to help businesses dependent on the U.S. market. Morales can still stumble and I don’t know how well the nationalization card will play out, but Bolivia’s economic outlook is definitely positive.

Bolivia’s Economy: Not Too Shabby